Oil discovery could triple Brazil cache

SAO PAULO, Brazil – A deep-water exploration area could contain as much as 33 billion barrels of oil, an amount that would nearly triple Brazil’s reserves and make the offshore bloc the world’s third-largest known oil reserve, a top energy official said Monday.

National Petroleum Agency President Haroldo Lima cautioned that his information on the field off the coast of Rio de Janeiro is unofficial. But his comments sent shares of state-run oil company Petrobras soaring in New York and Sao Paulo.

Petrobras said in a statement that more studies are needed to determine the potential of what could be the planet’s largest oil find in decades. Analysts said the magnitude of the find, if confirmed, could have far-reaching global energy ramifications.

“This would lay to rest some of the peak oil pronouncements that we were out of oil, that we weren’t going to find anymore and that we have to change our way of life,” said Roger Read, an energy analyst and managing director at New York-based investment bank Natixis Bleichroeder Inc.

Lima told reporters that Petrobras “may have discovered a huge petroleum field that could contain reserves large as 33 billion barrels,” amounting to the world’s third-largest reserve, according to his spokesman, Luiz Fernando Manso.

Brazil’s current proven oil reserves are 11.8 billion barrels, according to the U.S. Energy Department. The U.S. has 21.8 billion barrels in proven reserves.

“You’re talking about a reserve the size of total U.S. reserves,” said Tim Evans, an analyst with Citigroup Inc. in New York. “It’s a big, big number.”

If proven, the oil in the exploration area called both Carioca and Sugarloaf Mountain by analysts would also be several times larger than the Tupi oil field, whose estimated reserves of 8 billion barrels were announced by Petroleo Brasileiro SA in November. Petrobras also announced a major find of natural gas in February in an Atlantic Ocean field nicknamed Jupiter.

The company said the location cited by Lima is made up of two exploration areas in one bloc where test wells are being drilled and geological studies are under way with Petrobras’ partners for the bloc, Britain’s BG Group and Spain’s Repsol YPF.

Industry experts say the Tupi and Jupiter fields alone could turn Brazil into a major oil and gas exporter and lead to it joining OPEC.